Tag Archives: ROI

How do you respond to your financial administrator or controller of the purse strings when they ask you what the return on investment is for your hospital-based simulation program? It’s quite complicated.

Return on investment in today’s vernacular implies that there is a financial spreadsheet that can show a positive bottom line after revenue (or direct cost savings) and expenses are accounted for. This is really difficult to do with simulation.

I have seen business plan after business plan of simulation centers that have promised their administration that they will become financially positive and start bringing in big bucks for the institution in some given period of time. Usually it’s part of the business plan that justifies the standing up of the simulation center. I think I can count on one hand the simulation programs that have actually achieved this status. Why is this?

The answer is because calculating discrete return on investment from the simulation alone is extraordinarily difficult to do. While there are some examples in the literature that attempt to quantify in dollar terms a return on investment, they are however few and far between. It is largely confined to some low hanging fruit with the most common example and published in the literature focusing on central line training.

Successfully integrated hospital focused simulation programs likely have found a way to quantify part of their offerings in a dollars and cents accounting scheme, but likely are providing tremendous value to their organizations that are extraordinarily difficult, if not impossible to demonstrate on spreadsheet.

What is the value the simulation center may bring to the ability of a hospital to recruit more patients because the community is aware of patient safety efforts and advanced training to improve care? What is the value of a simulation center in its ability to create exciting training opportunities that allow the staff to feel like the system is investing in them and ultimately helping with recruiting of new staff, along with retention of existing staff members?

What is the value or potential in the ability to avoid causing harm to patients such as mismanaged difficult airway because of simulation training of physicians and other providers who provide such care? What is the value of litigation avoidance for the same topic?

Also, the value proposition of the successfully implemented simulation program for patient safety extinguishes itself over time if it significantly reduces or eliminates the underlying problem. This is the so-called phenomenon of safety being a dynamic, nonevent. Going back to the more concrete example of airway if your airway management mishap rates have been essentially zero over several years, the institutional memory may become fuzzy on why you invest so much money and difficult airway training….. A conundrum to be sure.

I think of fire alarm systems in the hospital as similar situation Let’s compare the two. Fire alarm systems detect or “discover” fires, began to put the fire out, and disseminate the news. Simulation programs have the ability to “detect” or discover potential patient safety problems for the identification of latent threats, poor systems design or staffing for example. Once identified, the simulation program develops training that helps “put out” the patient safety threat. One could argue that the training itself is the dissemination of information that a patient safety “fire” exists.

Fire alarm systems and hospitals cost hundreds of thousands, possibly millions of dollars to install and run on the annual basis. But the chief financial officer never asks what’s the return on investment? Why is that?

Well, perhaps it is a non-issue because fire alarm systems have successfully been written into law, regulations of building codes and so on. Regulation is an interesting idea for simulation to be sure but probably not for a long time.

However, if you think about it beyond a regulatory requirement, the likelihood of a given fire alarm system actually saving a life is probably significantly less probable then a well-integrated simulation program that is providing patient safety programs designed around the needs of the institution it serves. Admittedly the image of hundreds of people being trapped in a burning building is probably more compelling to the finance guy then one patient at a time dying from hypoxia from a mismanaged difficult airway.

Do you really know what to do when the fire alarm system goes off in your hospital? I mean we have little rituals like close the doors etc. But what next? Do we run? If we run, do we run toward the fire? Or away from the fire?  Do we evacuate all the patients? Do we individually call the fire department? Do we find hoses and start squirting out the fire?

When we conduct simulation-based training in hospitals that are aligned with the patient safety needs of the given institution we are extinguishing or minimizing the situation that patients will undergo or suffer from unintended patient harm. The existence of simulation programs and attention to patient safety education are a critical need for the infrastructure of any hospital caring for patients.

The more we can expand upon this concept and allow our expertise in simulation to contribute to the overall mission of the institution in reducing potential harm to patients and hospital staff, the more likely we will receive continuing support and be recognized as important infrastructure to providing the highest quality and safety to our patients.

Just like the fire alarm systems.